The required adjusting entry recognizes the

1. In the past period, customers paid for operas that were performed in the current period. The required adjusting entry recognizes the A) portion of the asset consumed or expensed, and reduces the balance of an asset account B) expense incurred, and records a liability for future payment C) revenue earned but not yet received, and records a receivable D) portion earned as revenue, and reduces the balance of a liability account

2. Which of the following most likely explains why a corporation’s stock trades at a very high price-earnings ratio? A) The corporation has several classes of stock outstanding B) The corporation is large with very low risk C) The corporation has very little long-term debt. D) Investors expect the corporation to have higher earnings in the future

3. A bond with a face value of $1,000 is quoted at 105-1/2. The bond is selling for A) $1105.50 B) $1,000.00 C) $1055.00 D) $1050.50

 

4. Liabilities are usually listed on the balance sheet A) in the order of smallest to largest. B) in the order in which they were incurred. C) in the order in which they are expected to be repaid. D) in alphabetical order

 

5. When a retailer purchases inventory under credit terms of 2/10, n/30, the retailer A) can deduct 2% from the invoice price by paying within 30 days of the invoice date B) can deduct 10% from the invoice price by paying within 2 days of the invoice date. C) can deduct 2% from the invoice price by paying within 10 days of the invoice date D) can deduct 2% from the invoice price by paying on the 10th day of the month following the month of the invoice.

 

6. Consider the following: 8% cumulative preferred stock, $100 par value, authorized 50,000 shares, issued 20,000 shares—–$2,000,000 Additional paid-in capital, preferred stock—$500,000 Common stock, $1 par value, authorized 10 million shares, issued 5 million shares—$5,000,000 Additional paid-in capital, common stock—$1,200,000Retained earnings—$3,200,000 Calculate the total paid-in capital of the corporation. A) $11,900,000 B) $8,700,000 C) $1,700,000 D) $4,900,000

7. Which of the following is NOT true about net income? A) Net income is an asset. B) Net income represents an increase in owners’ equity. C) Net income is the result of revenues exceeding expenses. D) The company can have a cash shortage and still have net income.

8. After closing entries are posted, which of these accounts will have a balance? A) Retained Earnings B) Income Summary C) Revenue D) Salary Expense

 

9. Which of the following is NOT a government agency? A) Security and Exchange Commission (SEC) B) General Accounting Office (GAO) C) American Accounting Association (AAA) D) Internal Revenue Service (IRS)

10. A company has 100,000 shares of $10 par value common shares outstanding. The company declares a 4-for1 stock split. As a result, which of the following will occur? A) Par value will become $2.50 and shares outstanding will be 400,000. B) Par value will become $2.50 and shares outstanding will not change. C) Par value will remain unchanged and shares outstanding will be 400,000. D) Par value will become $40.00 and shares outstanding will be 25,000.

11. Taxpayers can use a depreciation method that conforms to generally accepted accounting principles but is based on a declining-balance method. What is the name of this accelerated depreciation method? A) Asset Cost Recovery Statement B) Asset Cost Recognition System C) Accelerated Cost Recovery System D) Modified Accelerated Cost Recovery System

12. The bookkeeper recorded a payment by check for store supplies as $1,340.56. The bank recorded the check at its correct amount of $3,140.56. If no adjusting entries are made and the error is not detected through the bank reconciliation, which of the following will occur? A) The trial balance will not balance. B) The checking account might become overdrawn C) The checkbook Cash account will be understated D) Accounts payable will be understated

 

13. On November 1, a building with an estimated life of 15 years and no estimated salvage value was purchased for $180,000. The adjusting entry on November 30 will include A) a debit to Depreciation Expense for $1,000 B) a debit to Depreciation Expense for $12,000. C) a credit to Depreciation Expense for $1,000. D) a credit to Accumulated Depreciation: Building for $12,000.

 

14. Consider the following: Cash——$10,000; Receivables—–20,000; Inventory—–$45,000; Accounts payable—–$12,000; Wages payable—–$3,000 Calculate the working capital, the current ratio, and the quick ratio. A) $60,000, 2, and 5 respectively

B) $15,000, 5, and 2 respectively C) $60,000, 5,and 2 respectively D) $60,000, 5 and 1 respectively

 

15. Calculate the interest on a $4,000, 6% note receivable dated April 10 and due on July 9. A) $18 B) $24 C) $240 D) $60

16. Which is more likely to appear in the financial statements of a closely held corporation but not in a large, publicly owned corporation? A) stock dividends B) treasury stock. C) prior period adjustments D) cash dividends

17. Office equipment was purchased by issuing a check for $5,000 and a note payable for the balance of $45,000. What effect did this transaction have on the financial position of the company? A) Assets–no change, Liabilities–no change, Owners’ Equity–no change. B) Assets–decrease, Liabilities–increase–Owners’ Equity–no change. C) Assets–increase, Liabilities–increase, Owners’ Equity–no change. D) Assets– decrease, Liabilities–no change, Owners’ Equity–decrease

18. The transferable shares of corporate ownership are known as A) public stock. B) treasury stock C) capital stock. D) private stock.

19. Assume that the sales tax rate in the county in which you reside is 8%. You’ve made a purchase of merchandise and charged the full amount, including sales tax, to your VISA card for $346.00. The retailer will recognize Sales Tax Payable of A) $32.03 B) $27.86 C) $24.33 D) $25.63

20. The collection of an account receivable A) increases total assets. B) increases owners’ equity. C) has no affect on total assets D) increases revenues

21. A company with owners’ equity of $2,400,000 had net income, after taxes, of $288,000, liabilities of $80,000 due in the near future, and an ending cash balance of $15,000. Which of the following is true? A) The company has a favorable current ratio. B) The company’s current ratio is 1:6 C) The company’s rate of return on equity was 12%. D) Total liabilities are $2,385,000

22. An asset having a four-year service life and a salvage value of $5,000 was acquired for $45,000 cash on June 28. What will be the depreciation expense at the end of the first year, December 31 A) $22,500, under the double-declining-balance method B) $7,000, under the straight-line method C) $11,250, under the double-declining-balance method D) $10,000, under the straight-line method

23. The inventory turnover rate of 10.0. What is the number of days to sell inventory? A) 20 days B) 36.5 days C) 10 days D) 365 days

24. Which of the following is a professional accounting organization of certified public accountants that engages in a variety of professional activities, including establishing auditing standards, conducting research, and working closely with the FASB in establishing financial reporting standards? A) American Institute of Certified Public Accountants  B) Financial Accounting Standards Board C) Institute of Internal Auditors D) Institute of Management Accountants

25. A $25,000, 12%, 3-month, note payable is issued on July 15. Calculate the maturity value of the note. A) $25,750 B) $750 C) $2,000 D) $25,000